The government remains confident that Indonesia’s economic growth this year will be significantly stronger than in 2025. This optimism is reflected in the 5.4% growth target set in the 2026 State Budget (APBN). Finance Minister Purbaya Yudhi Sadewa has even expressed confidence that economic growth could reach 6% in 2026, arguing that such a figure is achievable given the strategies already prepared by the government.

Speaking at a press conference in Central Jakarta on Wednesday (31/12/2025), Purbaya reiterated that a 6% growth rate should not be difficult to attain, as he has stated on multiple occasions.

In contrast, CORE Indonesia Executive Director Mohammad Faisal offered a more cautious outlook. He projected that Indonesia’s economic growth in 2026 could slow due to natural disasters in Sumatra, making the 6% target difficult to realize. Disasters in Aceh, North Sumatra, and West Sumatra have directly affected production and consumption activities across 52 districts, which together contribute approximately 5% to the national Gross Domestic Product (GDP).

Faisal emphasized that the substantial contribution of these regions means economic disruptions there have a notable impact on national growth. He explained that CORE Indonesia initially forecast economic growth in 2026 at around 4.9% to 5.1%, suggesting that while the economy remains relatively resilient, it is unlikely to experience strong acceleration.

According to him, the impact of the natural disasters will likely further weigh on growth prospects, as economic activity in the affected provinces will inevitably decline. For example, in the fourth quarter of 2025 alone, Aceh’s economy is expected to face the sharpest pressure, with regional GDP growth estimated to contract by 0.44%, while North Sumatra and West Sumatra are projected to see declines of 0.15% and 0.36%, respectively.

Faisal noted that while the effects of the disaster in 2025 were only felt for about one month, the impact in 2026 will be more prolonged due to the lengthy recovery and reconstruction process. He expects economic growth in the 52 affected districts to remain negative throughout 2026. Drawing parallels with the Aceh tsunami, he recalled that its economic impact persisted for several years beyond the initial event.

Based on these factors, Faisal believes Indonesia’s economic growth in 2026 is unlikely to reach 5%. He stressed that CORE Indonesia’s projection remains within the 4.9%–5.1% range, with a higher probability of landing at the lower bound. Nevertheless, he acknowledged that growth could exceed 5.1% if the government implements more adaptive and effective policy measures to address existing challenges.

Meanwhile, Senior Economist at INDEF Tauhid Ahmad maintained a more optimistic view, suggesting that Indonesia’s economic growth in 2026 could remain above 5% and exceed the projected growth for 2025, which is estimated at around 5.06–5.07%. He expects growth in 2026 to remain moderate at approximately 5%, although it may fall short of the government’s 5.4% target.

Tauhid explained that economic growth in 2026 would be largely supported by improved government spending, particularly through President Prabowo Subianto’s priority programs such as the Free Nutritious Meal Program (MBG) and the Red and White Village Cooperative initiative. However, he noted that the impact of these programs in 2025 was still limited, as they were in early stages of implementation, with constrained beneficiary coverage, mechanisms, and budget absorption.

He also pointed out that most Red and White Village Cooperatives are still in their formative phase, with only around 100–200 actively operating, while tens of thousands have merely obtained legal status. As a result, the effectiveness of these initiatives has yet to be fully reflected in the 2025 economic performance.

Tauhid added that the current growth projections do not fully incorporate the economic impact of floods and landslides in several parts of Sumatra. This situation further complicates the government’s efforts to achieve its 5.4% growth target in 2026. Nevertheless, he believes that while reaching 5.4% will be challenging, Indonesia’s economy is still likely to grow above 5% in 2026.